The gap between promised pension benefits for San Diego city employees and available money to pay them has ballooned to $2.7 billion, according to an actuary hired by the city to monitor the pension system.

Actuary Joseph Esuchanko told the City Council the amount owed to retirees over the next couple of decades has grown to $6.5 billion as of Oct. 31, while the market value of its assets slid to $3.8 billion because of the global economic crisis.

However, he said the shortfall was less as of June 30, a more important date because it's the snapshot of the system that's used to calculate the city's annual pension contribution for the fiscal year that begins July 1, 2009.

Esuchanko also said that pension officials will calculate a different amount for the shortfall because they “smooth out” market spikes by factoring in multiple years of market activity.

The Mayor's Office has estimated its annual pension payment in July 2009 will be $166 million, based on input from pension administrators, but Esuchanko told the council, under questioning from outgoing City Attorney Michael Aguirre, that the amount owed could actually be as high as $251 million.

Pension administrator David Wescoe did not accept the council's offer to attend Wednesday's daylong meeting on financial issues such as the pension deficit and a looming budget shortfall, so he was not present to respond to Esuchanko's comments.

In an interview, Wescoe said he didn't attend the meeting because he believed its focus would be the 2009 budget, not future years.

He declined comment on Esuchanko's $2.7 billion estimate for the pension liability, saying retirement officials calculate the actuarial liability only once a year and that the next calculation would be released next month based on a snapshot of the system's assets and liabilities from June 30.

“You can't really calculate it seat of the pants,” he said. “It's very dangerous to try to predict an actual outcome by focusing on just one or two elements,” he said. “There are a lot of moving parts in any valuation, and they all impact one another and that's why it is most prudent to wait until the professional actuary completes his work and presents it publicly.”

Wescoe added, “It's an important discussion for the city to understand the potential of their longterm financial commitments to the pension system” but said it's equally important “to keep in mind that if you're basing that discussion on an October or November number, and there's still seven months to go in the fiscal year, you can reach the wrong conclusion based on the wrong data and that is counter productive.”

Aguirre, who will leave office in December when newly-elected Jan Goldsmith takes over as city attorney, used Wednesday's high-profile hearing to again raise the prospect of bankruptcy for San Diego, a scenario that no other elected official in the city seems likely to embrace.

“I think that the time has come for the city of San Diego to give very serious consideration to the fact of whether we do or do not have to consider reorganization, either for the city or for the pension plan as an option,” Aguirre told the council.

“What happened is we suffered a catastrophic loss and everybody is trying to put a Band-Aid on it,” Aguirre said in an interview. “The last thing in the world we want to do is minimize the problem.”

The city's annual pension payment has never exceeded $163 million, even at the peak of its own fiscal crisis. The new five-year financial outlook the Mayor's Office released Wednesday shows the payment will be $166 million July 1, and as much as $236 million a year later.

In the three years that follow, that payment could continue to grow, to $256 million, then $276 million and finally $291 million – payments that would consume increasingly larger portions of the city's general fund that pays for a broad range of city services.

That's in a worst-case scenario. The city also estimated what its costs would be if financial markets recover more quickly and pension officials take steps to reduce their expenses. Under this scenario, the city's pension payment would increase to $199 million July 1, 2010, then continue to grow, to $207 million, then $215.2 million and finally $223.8 million.